MegaFon, Russia’s second-largest mobile phone operator, seeks to raise as much as $2.1 bn in an IPO through global DRs in London and shares in Moscow, the company has said.
MegaFon set the IPO price range at between $20 and $25 a share for a total of between $1.7 bn and $2.1 bn, valuing the company at between $11 bn and $14 bn, according to a MegaFon press release. The IPO would be the largest from Russia in three years.
‘The level of interest we have seen in the investment community since announcing our planned IPO sets a strong backdrop to the announcement of our price range today and the commencement of the roadshow and international booking,’ says MegaFon CEO Ivan Tavrin in a release.
‘We believe there is already high regard for MegaFon and its track record of innovation and profitable growth, as well as the appetite for quality exposure to the Russian telecoms growth story.’
MegaFon last week reported a 20 percent year-on-year increase in third quarter income to RUB15 bn ($472 mn), which Tavrin says set a record high for the company and ‘demonstrates continuing momentum’.
Last month, Goldman Sachs quit its role as lead bank in the IPO after controlling shareholder Alisher Usmanov, Russia’s richest man, told Reuters in an interview that he aimed to merge his assets, including steel companies and British soccer team Arsenal, into a single umbrella company. Such a move would have left Goldman Sachs co-ordinating an IPO with an uncertain ownership structure.
MegaFon said the roadshow and institutional bookbuilding would resume immediately and last until November 27, with share trading expected to start on November 28. AF Telecom, a company controlled by Usmanov, will continue to hold more than 50 percent of MegaFon’s issued share capital upon completion of the offering, according to MegaFon.
Morgan Stanley and Sberbank CIB are acting as joint global co-ordinators in the IPO, and also as joint bookrunners with Citi, Credit Suisse and VTB Capital, MegaFon adds.
MegaFon shareholder TeliaSonera, the Nordic telecoms company, says in a separate press release that, depending on the results of the IPO, it may reduce its current 35.6 percent ownership but still keep a long-term strategic ownership of at least 25 percent plus one share in MegaFon after the IPO.
Assuming TeliaSonera pursues this route, MegaFon says a new board would include three directors from AF Telecom, two from TeliaSonera, and two independent directors.
